Some of us are already familiar with the concept of an unsecured credit card. With this type of account, you do not have to make a deposit in order to be approved. Having a good credit standing also contributes to the odds of being approved. However, there is another type of card called a secured credit card that serves as an alternative for those who may have limited credit histories or low credit scores.
As the name suggests, a secured credit card is “secured” by making a deposit. This deposit will either be a down payment on the credit line or the total amount of it, and it acts as collateral in the event a consumer defaults on payment. As mentioned previously, these types of cards are ideal for those who have poor credit or little to no credit history. Although you do have to pay a deposit in order to receive it, this account will reflect on your credit report and help you on your journey towards improving your credit score or building on a nonexistent credit history. By improving your credit, you will also be able to further reach any other financial goals you have in mind, such as purchasing a car or becoming a first-time homebuyer.
Remember, make your monthly payments on-time to any credit accounts you hold. We also recommend not to use more than 30% of your credit limit, when possible. By making on-time payments and managing the percentage you use of your credit, you are showing that you can use credit wisely, manage monthly payments, and not max out your cards. For other tips and advice that could further help improve your credit, we’re here to help! Feel free to call in anytime for a counselor to assess your credit and provide advice to you based on your individual situation.
Sources:
https://www.cnbc.com/select/secured-credit-cards-vs-unsecured-credit-cards/
https://www.investopedia.com/terms/s/securedcard.asp
https://www.credit.com/credit-cards/content/faq/what-is-a-secured-credit-card/